Financial planning is an essential part of our lives, but something that a significant number of people tends to struggle with. The average individual often does not have the expertise needed to set up a proper financial planning system. This is where a financial planner comes into the picture. These professionals are highly experienced in delivering effective planning tools for the customer. In turn, they help you with retirement planning, investment planning, budgeting, and other essential factors.
Different types of financial planners exist. If you are looking to utilize the services of these professionals, it is important to understand the differences among the three types of financial planners and their roles. This ensures you consult with the correct financial planner and do not end up wasting time and money.
1. Investment Advisors
One of the most common types is the investment advisor. This refers to a financial planner who can take a look at your investment portfolio and offer actionable steps to take, as well as solid advice. The advisor would be highly experienced in keeping up with the stock market and the latest investment opportunities that are available. Note that an investment advisor should be registered to ensure they have undergone appropriate training.
In some cases, the investment advisor would also offer you an opportunity to have their agency or company manage your assets. This can be a good option if you do not want to make investments yourself, but rather prefer to trust someone else with these decisions.
Many people do not realize it, but brokers are technically also a type of financial advisor or planner. Brokers generally give you a full overview of how the stock market works. They can then help you plan out a program that allows you to buy and sell different types of securities. The broker may also manage your transactions for you. In these cases, you will likely be charged a percentage of all profits that are made by the broker. Some brokers would rather send you a fixed monthly invoice and let you keep any profits made on your account.
3. Certified Financial Advisors
Many people who serve as financial planners are not officially certified. This does not mean they do not have the skills, however. If you do want more surety when using the services of these professionals, however, then you should look for a certified financial advisor. Make sure the professional is certified by the CFP board before you hire them, however.
These individuals go through a range of difficult tasks to ensure they have mastered the process of financial planning. The certification also adds trustworthiness and authority to the professional as a service provider.
Financial planners can often help with much more than the average person thinks. The problem, however, is that people sometimes go to the wrong type of financial planner for their needs. We looked at common types of financial planners and thir roles by providing an overview of what each does. This should help you find the right planner according to the expectations and requirements you have so you can reach your financial goals.